Arab Today, arab today china demand supports arcelormittal
Last Updated : GMT 05:03:58
Arab Today, arab today
Arab Today, arab today

China demand supports ArcelorMittal

Arab Today, arab today

Arab Today, arab today China demand supports ArcelorMittal

Brussels - Arabstoday

ArcelorMittal forecast a seasonal dip in the third quarter, but said demand from China and the auto industry should indirectly ensure no repeat of last year\'s sharp slowdown. The company, which makes 6 to 7 per cent of the world\'s steel and whose production is more than double that of its nearest rival, said it had raised its forecast for global steel consumption this year due to continued strong demand from China. Apparent steel consumption China, not a main market for ArcelorMittal but influential in driving prices and demand, should increase by more than 8.5 per cent this year, meaning global sector expansion would be 7 to 7.5 per cent. Higher steel prices and blast furnaces running at some 80 per cent of capacity helped drive core profit (EBITDA) to $3.41 billion (Dh12.5 billion) in the second quarter, more than the market had expected and the highest level since before the 2008-2009 crisis. Article continues below It would then fall back to between $2.4 billion and $2.8 billion in the third quarter, the company said. According to a Reuters poll, the market expected core profit of $3.25 billion in the second quarter and $2.65 billion in the third. \"As expected the company has delivered a strong performance in the second quarter of 2011 underpinned by higher steel selling prices,\" Chief Executive Lakshmi Mittal said in a statement. \"Although the third quarter will experience some seasonal impact, we do not expect this to be as pronounced as last year, and overall the group\'s performance in the second half of 2011 should compare favourably with the second half of 2010.\" The company said steel shipments and earnings per tonne in the second half of the year would be higher than in the second half of 2010, when a sharp slowdown drove ArcelorMittal into a final quarter loss. Relatively low levels of inventories could help avoid a repeat of last year\'s poor second half, with reasonable prospects of some fourth-quarter pick-up. Pressure on margins Demand typically dips in the third quarter, the northern hemisphere summer, but sector earnings also face pressure from record production in China and demand capped by tighter monetary policy there and debt problems in Europe and the US. South Korea\'s Posco warned last week of weakening demand growth and persistently high costs in the second half. European hot rolled steel cord prices rose 30 per cent in the first quarter, while spot prices for Chinese iron ore imports increased by just 3 per cent, according to Metal Bulletin. However, during the April-June period, prices for the same products fell 12 per cent and 3 per cent respectively. For ArcelorMittal, spot prices usually affect earnings with a three to four-month time lag, meaning tighter margins in the second quarter will be reflected in third-quarter figures. Steelmakers have profited from a booming auto sector, but there is little sign of recovery among the other main customers in construction, a market where ArcelorMittal is more exposed than rivals. Increased exposure ArcelorMittal should benefit from its increasing exposure to iron ore and coal mining, for which it is providing separate earnings figures from this year, particularly after disruptions in Brazil and Canada in the first quarter. The company said it should achieve volume growth of 10 per cent for iron ore and 20 per cent for coking coal, with higher prices and stable costs.

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Arab Today, arab today china demand supports arcelormittal Arab Today, arab today china demand supports arcelormittal

 



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